Mr. Todd Ziniuk reports

ZEDCOR INC. ANNOUNCES THIRD QUARTER RESULTS FOR 2023 WITH INCREASE IN YEAR OVER YEAR REVENUE AND $2.3 MILLION OF ADJUSTED EBITDA

Zedcor Inc. has released its financial and operating results for the three months and nine months ended Sept. 30, 2023.

Third quarter 2023 revenues were $6.4-million, the company had adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $2.3-million and net income before income taxes was $288. This represented an 11-per-cent increase in revenues compared with Q3 2022.

During the quarter, the company allocated approximately 33 per cent of its MobileyeZ security tower fleet to Ontario. These towers are being utilized at construction and automotive customer sites. Zedcor has continued to allocate security towers to Eastern Canada as it expands its service capabilities in the region.

Todd Ziniuk, president and chief executive officer, said: "We continue to diversify our customers and add new customers across Canada. We have also expanded to the United States, which will further expand our assembly capabilities and also allow us to get access to a large market. We are planning to exit 2023 with approximately 45 security towers in the U.S. while continuing to expand in Canada, with a focus on Eastern Canada. We are also seeing demand for our services across different industry verticals, with a focus on the retail sector, where we believe there is a large opportunity for disruption. In April, we launched a pilot project with a large home improvement retailer and were successfully awarded a multiyear contract with them to provide MobileyeZ at multiple locations and distribution centres across Canada. Adding this prominent, large-scale client shows the value that Zedcor is able to deliver to customers. Our team has also done an exceptional job, redeploying MobileyeZ returned from our largest customer as their project ended. This has derisked and further diversified our revenue streams."

Zedcor recorded $6,431 and $19,090 of revenue for the three and nine months ended Sept. 30, 2023. This compares with $5,795 and $15,682 of revenue from for the three and nine months ended Sept. 30, 2022. The revenue growth of 11 per cent and 22 per cent is the result of a larger fleet of security towers located throughout the company's six service centres in Canada. Adjusted EBITDA grew to $2,285 and $6,244 for the three and nine months ended Sept. 30, 2023, compared with $2,121 and $5,188 for the three and nine months ended Sept. 30, 2022. This represented a growth of 18 per cent for the nine months ended Sept. 30, 2023.

The company's security and surveillance services saw increased revenues and EBITDA for the three and nine months ended Sept. 30, 2023, compared with 2022 due largely to increased customer demand of its larger fleet of MobileyeZ security towers. The increased revenue was offset by: (1) reduced security guard revenue; and (2) reduced revenue from a large pipeline construction project that is nearing completion. A majority of the security towers returned from the pipeline construction project have been rented to new or existing customers across Canada and, therefore, reduced the company's customer/industry concentration risk.

Zedcor exited the period with 755 MobileyeZ security towers, which were an increase of 249 when compared with Dec. 31, 2022, and 314 units when compared with Sept. 30, 2022. Of the 755 units, 12 are located in Zedcor's Houston, Tex., service centre going through an extensive retrofit program to meet the requirements of the U.S. market.

Financial and operational highlights for the three and nine months ended Sept. 30, 2023, include:

• Net income of $288 for the three months ended Sept. 30, 2023: This compares with net income of $966 for the three months ended Sept. 30, 2022. For the nine months ended Sept. 30, 2023, net income was $3,512 compared with net income of $2,922 for the nine months ended Sept. 30, 2022. The increase in net income over the nine months is directly attributable to: (1) a larger fleet of towers and strong customer demand, which drove utilization and, in turn, revenues; and (2) $2,159 in other income. As part of the sale of the company's rental segment assets in 2021, the company is to receive a 35-per-cent bonus for every dollar of EBITDA over certain thresholds. As a result of this agreement, the company will receive $2,159 for the second anniversary payment.
• Continued traction across Ontario: The company expanded to Ottawa in second quarter 2022 and to Toronto in third quarter 2022. As at Sept. 30, 2023, approximately 33 per cent of the company's MobileyeZ security tower fleet is located in Ontario. This represents a growth of 7 per cent from the end of Q2 2023 and 22 per cent from the start of the year. It is seeing strong demand for the company's services in Eastern Canada, and additional security towers will continue to be delivered to Ontario and Manitoba through fourth quarter 2023.
• Diversification away from the company's core pipeline construction customers: As the company increases its fleet of MobileyeZ and expands geographically, its risk related to customer concentration is decreased. For the three-month period ended Sept. 30, 2023, approximately 33 per cent of the company's revenues were generated from its top-three customers, down from 72 per cent over the three-month period ended Sept. 30, 2022. Zedcor's services are customer and industry agonistic, and Zedcor continued to see that in the first nine months of the year as it continued to diversify its customers across the construction industry and into retail security.
• Expansion into retail security with a leading North American home improvement retailer: After a three-month pilot program which began in June, 2023, with locations tested in British Colombia, Southern Alberta and Southern Ontario, Zedcor entered into a master rental service agreement to provide MobileyeZ security towers with 24-seven live, verified monitoring at numerous locations across Canada until September, 2026.
• Award of Ontario O-Train construction mobile security project: Sites being secured include equipment storage yards, light maintenance and storage facilities, and five LRT stations under construction on the O-Train West Extension. As at Sept. 30, 2023, the company has 19 MobileyeZ security towers deployed with anticipated peak demand for this project up to 26 MobileyeZ. The construction project is expected to be completed in late 2026.
• The company continued to attract new customers across Canada. For the three months ended Sept. 30, 2023, the company provided services to more than 21 new customers. For the nine months ended Sept. 30, 2023, the company has added over 138 new customers.
• On-track U.S. expansion: In Q3 2023, the company leased a facility and hired its first employee in the U.S. In addition, the company has shipped a small number of security towers for research and development purposes to help ensure supply targets are met for its 2024 expansion program. It anticipates exiting the year with approximately 45 solar electric MobileyeZ, which will be the preferred unit for this market going forward. Subsequent to the end of the quarter, the company obtained its Texas security licence, continued positive business development with both existing Canadian customers with operations in the U.S. and potential United States-based customers, hired two sales people for the Houston market, and exported additional security towers to the Houston service centre.

Outlook

Zedcor continues to execute its long-term strategy of expanding its technology-enabled security services across North America. While there were supply chain delays throughout first quarter, which slowed down the company's ability to build security towers, these were largely resolved in second quarter, resulting in 68-per-cent growth in the MobileyeZ fleet from September, 2022, to September, 2023. Zedcor continues to effectively use a mix of cash flow and debt to build additional MobileyeZ security towers to provide surveillance services to its expanding customer base. In addition, there are inflationary pressures that the company is actively monitoring to maintain margins, and this remains a priority for management.

Utilization of the company's surveillance towers has stayed consistent from June, 2023, at above 80 per cent in September, 2023, despite the increase in tower fleet size. While it expects the utilization rates to remain strong going forward, there will be volatility on a monthly basis as the Trans Mountain Expansion pipeline project comes to an end and equipment is redeployed to other customers throughout the company's operating regions. The company has expanded its sales force across Canada to obtain contracts for its MobileyeZ and continue to expand its service offering to different industries. With the anticipated completion of the Trans Mountain Expansion pipeline by the end of 2023, the company is situated with a growing sales force and expanded geographical footprint to be able to diversify its customer base while maintaining utilization rates. This was evidenced in Q2 and Q3 as Zedcor was able to redeploy a significant portion of the MobileyeZ returned from Trans Mountain to new customers, maintaining utilization despite the return of equipment and a larger MobileyeZ fleet.

Priorities that the company intends to focus on for the rest of 2023 and the entirety of 2024 include:

1. Obtaining more customers, with a focus on enterprise-level customers, and diversifying customer base, including geographically and across different industry verticals: The company is seeing strong demand for its MobileyeZ across Canada and has expanded to the United States in the second half of 2023. Based on preliminary research, there is a large market for Zedcor's integrated solution of MobileyeZ security towers with monitoring services. Due to significant spending on infrastructure in the United States, the company believes its products, coupled with Zedcor's commitment to customer service, are perfectly situated for this market. Zedcor also intends to increase its presence in Eastern Canada.
2. Continued expansion across Canada: The company expanded to Ontario with equipment and service centres in Ottawa and Toronto. The company has secured customers in Ontario and Quebec, and intends to allocate a sizable portion of its 2023 and 2024 capital spending to expand its Eastern Canada operations and fleet size. The company has also hired salespeople and branch managers for all of its equipment and service centres across Canada.
3. Expansion into the U.S. market: The company has leased a facility and has increased its head count through Q3 2023. Towers are being prepared for deployment in fourth quarter 2023 with a ramp-up in the U.S. fleet through 2024 and beyond to meet high expected demand for the MobileyeZ security tower and monitoring services.
4. Maintaining margin levels by increasing operational efficiency and continuing to invest in technology: Zedcor has investigated a number of artificial intelligence options that will reduce the number of alarms in its monitoring centre. It will be investing in technological solutions to help it exploit this and is actively testing options.
5. Building new, innovative products based on customer demand: As the company has obtained customers in different industry verticals, it has seen an increasing number of use cases for its MobileyeZ. This includes a need for additional sensor technology in both the retail and construction industries. As a result, the company intends to increase its product offering in sensor technology to help customers solve issues around asset security. As the company expands into different geographies, it intends to continue to develop additional types of MobileyeZ security towers, including a full solar security tower.
6. The company intends to continue to generate customer and shareholder value and positive earnings per share. By effectively managing its growth, executing on the above-noted strategies and increasing its capital market presence, Zedcor will be able to continue to generate positive earnings per share, expand its shareholder base and increase share price.

No conference call

No conference call will be held in conjunction with this release. Full details of the company's financial results, in the form of the condensed consolidated interim financial statements and notes for the three months ended Sept. 30, 2023, and 2022, and management's discussion and analysis of the results, are available on SEDAR+ and on the company's website.

About Zedcor Inc.

Zedcor is a Canadian public corporation and is the parent company to Zedcor Security Solutions Corp. Zedcor is a technology-enabled company that is changing how physical security services are provided to businesses. Zedcor operates throughout Canada with equipment and servicing centres in British Columbia, Alberta, Manitoba and Ontario. The company has three main service offerings to customers across all market segments: (1) surveillance and live monitoring through its proprietary MobileyeZ security towers; (2) surveillance and live monitoring of fixed site locations; and (3) security personnel.

The company operates a fleet of over 700 proprietary MobileyeZ security towers, equipped with high-resolution, technology-based cameras, and monitors numerous fixed site locations for customers across various industries. Video from security towers and fixed site locations is streamed to the company's central monitoring station, where video alarms are live verified and responded to based on customer requirements. Zedcor also offers high-level security guard services to enterprise-level customers which are looking to supplement video-based security for valuable, high-risk or mission-critical operational assets.

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